The Federalist Papers – by C.E. Deyer
The market has seen a major shift in the crude oil market as U.S. production along with OPEC production, which is reportedly in the process of output reductions, flood the market, driving the price to below $50.
What’s happening? Zero Hedge reported:
Oil is headed for its biggest weekly loss since early March as signs that OPEC will continue with output reductions are offset by growing U.S. production and inventory gluts. Having tried and failed to spark some momentum yesterday (via Saudi jawboning and Goldman confidence), WTI Crude just plunged below $50 for the first time since March.
“It all comes down to whether OPEC can deliver inventory cuts,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, said by telephone. “So far we haven’t seen a lot of evidence that they’re succeeding.”
What does it mean? “We are once again seeing the emerging stalemate between OPEC and non-OPEC cutting efforts on one side and rising U.S. production on the other,” Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, explained. “We are currently testing the lower end of the range. This market is unlikely to go anywhere for the foreseeable future.”
“All indications [point] to yet another weekly rise for operational oil rigs,” Robbie Fraser, commodity analyst at Schneider Electric, noted. “As such, the U.S. is poised for further output gains ahead, which should look to cap any significant price rally over the near-term.”
Anthony Headrick, energy market analyst at CHS Hedging, explained that potential dips below $50 present a problem for OPEC, but less so for the United States. “It’s a cat-and-mouse type environment,” he said.
“Prices in the $40s are not as much an issue for U.S. producers that have hedged,” he continued. “Conversely, it’s a concern for OPEC in terms of what they want that price to be.”
Reuters reported:
Saudi Arabia and Kuwait, key members of the Organization of the Petroleum Exporting Countries, favor extending their production-limiting deal with non-member producers into the second half of the year.
Russia’s Energy Minister Alexander Novak, however, declined to say whether the top non-OPEC oil producer would adhere to an extension, saying global stocks were declining.
“The situation has gradually been improving since the beginning of March,” Novak said.
Uncertainty surrounding whether output cuts will be extended at a joint meeting on May 25 meeting is sure to drive market dynamics until then. Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB, does not expect OPEC to roll over its cuts, saying it could potentially leave the cartel in a weaker position as it creates a risk “for more stimulus of the U.S. shale oil sector.”
Just smile, bend over, tell your hungry children to hush because we must all learn to be globalist goy. $5 a gal ain’t to bad, after all we owe our masters the right to have 2 more solid gold toilets to shit in.
F*** OPEC! It’s just as Henry said, we have all the resources we will ever need RIGHT HERE! Anyone waiting for “Tronald Dump” to put “America first” may as well join Jiminy Cricket in wishing on a star. And another thing: just watch, when the rag heads and the rest of the sand people have no more oil, they’ll go back to slashing each others’ throats like they have since the beginning of time.
How the f#@k is it that if oil prices go over $100 per barrel, five dollars a gallon is coming, but if the price goes under $50 per barrel, five dollars a gallon is coming?!
Let’s see now. The price of oil may drop below $50.00 a barrel so, in “Opposite George” world, retail prices skyrocket, right? Everything makes so much sense now. Not.